Gas shortages linked to the Iran conflict are threatening India's auto production and straining supply chains as demand peaks in the world's third-largest car market. Manufacturers expect sales to cross four point five million (mn) units in the current fiscal year to March 31, leaving little buffer inventory with producers and dealers. The interruption of gas supplies is emerging as a systemic stress that could constrain output just as consumer demand reaches record levels.

Several parts suppliers to major carmakers including Maruti Suzuki, Tata Motors and Mahindra have reported reduced gas availability for factory operations, affecting high-heat processes such as forging, casting and paint shops. Small and medium manufacturing units, which form the industry backbone, are particularly vulnerable because they rely more on gas and lack the flexibility to switch fuel sources quickly. Executives indicated that some plants are operating below capacity and that buffer stocks will not last long.

Automakers are working closely with suppliers to manage production and have not yet formally cut schedules, while firms are optimising operations and rerouting supplies where possible. Kirloskar Ferrous has halted some production at a western India facility and Hindalco has declared force majeure for some customers, signalling tangible disruptions in metal and parts supply. Companies said they are prioritising continuity and taking contingency measures to keep assembly lines moving.

India imports roughly 50 per cent of its natural gas, mostly from Qatar, and shipments through the Strait of Hormuz have fallen after attacks on vessels and damage to regional refineries. The government has prioritised household supply over industrial use, compounding pressure on energy intensive segments of the auto value chain. S&P Global Mobility has cut its India outlook to six point three per cent growth in light vehicle production for 2026, down from seven point four per cent, and warned that forecasts may be revised again depending on the conflict timeline.